The review found the new ‘mobilisation’ option, which offers authorisation when an applicant has met ‘key essential elements’ but still requires completion on a few other areas is helping institutions raise capital or invest in expensive IT systems.
The BBA confirmed three of the five newly authorised banks used this fast track ‘mobilisation’ option with several more expected to do so.
The five latest banks to be authorised include Axis Bank UK Limited; Union Bank of India (UK) Limited, FCMB (UK) Limited, UBA Capital (Europe) Limited and Paragon Bank plc.
To 31 March this year, over 25 potential bank applicants have had pre-banking license application meetings with the FCA.
The BBA confirmed banking applicants have offered a range of business models from retail and wholesale banking to FCA-regulated payment services firms keen to enter the banking market and offer deposits and lending to an existing client base including small small-to-medium enterprises (SMEs). Others are proposing to offer a mixture of SME or mortgage lending funded by retail and SME deposits.
The minimum amount of initial capital required by a new entrant bank is £1m compared to £5m under the previous regime, however, firms must retain a clear recovery and resolution plan in place in the event of difficulties.
Andrew Bailey, chief executive of the Prudential Regulation Authority said: “It is clear that the changes introduced last year have been positive for new entrants and will make a contribution to increasing competition and thus benefit customers.”
Martin Wheatley, chief executive of the Financial Conduct Authority said: “The changes will ultimately offer consumers greater choice and encourage innovation. In any sector, newcomers to the market bring fresh thinking, and challenge established firms to consider how they can offer a better deal or improve the service they offer. I’m keen we maintain this progress, and want to see greater
competition in retail banking work for the benefit of consumers.”
The PRA intends to publish annual statistics on banking authorisation.
